Algorithm of the OFCCP Enforcement Trend – Part 2 of 3

Algorithm of the OFCCP Enforcement Trend – Part 2 of 3

Part I reviewed the OFCCP’s many accomplishments in 2013 and discussed their implications for 2014. Its 2014 agenda appears no less ambitious (more on that soon). Let’s briefly compare the OFCCP of the Clinton, Bush and Obama years to get an idea of what likely lies ahead.

The Clinton Years: Director Shirley Wilcher took a strong interest in compensation issues and, initially, a tough stance on employment discrimination in general. Yet the OFCCP’s focus on technical compliance (e.g. posting, outreach) did not appear to change too much. Her proposed EEO Survey intended to cause contractors to start counting and reporting compensation, was one exception. Her successor, however, ultimately withdrew that proposal. The OFCCP under Clinton/Wilcher appears to focus more on the depth and length of compliance reviews rather than the number of reviews. The agency, under Shirley Wilcher’s leadership, broke ground not only by promulgating regulations (41 CFR 60-1 and 60-2) but also by reaching nationwide settlements in both the Texaco and Boeing cases. Compensation and Corporate Management Reviews were certainly the highlight of enforcement. Budget constraints, however, limited the agency’s ability to investigate more cases.

The George W. Bush Years: The OFCCP under President George W. Bush and Director Charles James experienced similar funding and staffing issues. Only FY 2002 and 2003 saw funding amounts slightly more than those requested by the President. Funding started at $76MM in FY 2002 and hovered on the low end of $80MM for the rest of the Bush presidency, and did not keep pace with inflation. Staffing as of FY 2002 was at 712 FTE’s and fell to 663 in FY 2004 and continued to fall to 585 for FY 2008 and 2009.i The OFCCP during these lean years focused on systemic discrimination issues, in order to maximize its resources to protect the greatest number of workers from discrimination.ii Notwithstanding the decrease in funding and staffing, the OFCCP did obtain record amounts of financial settlements. Between 2002 and 2004, the amount of financial remedies (e.g. back pay, salaries) increased from $24MM to $34.5MM. In FY 2008 the OFCCP made total financial settlements of $67,510,892iii for a record 24,508 workers, despite a budget of only $81MM and a total staff of 585 FTE’s. Inadequate funding and staffing in the Clinton and George W. Bush years produced a less than robust OFCCP. In essence only contractors committing egregious violations of EO 11246, Section 503 of the Rehabilitation Act and VEVRAA were likely to get caught in the OFCCP’s crosshairs.

The Obama Years: Enter Barack Obama, and Director Patricia Shiu. President Obama, upon taking office stated his goal of ending pay inequities between men and women, affirmed his commitment to civil rights and chose an OFCCP director who demonstrated that very same commitment. Additionally, Congress appears more willing to fund such commitments as seen by budgets that jumped to $105,386MM in funding and high 780 ranges in FTE’s in FY 2010, and beyond, up from $84,172 in funding and 596 FTE’s in FY 2009.

Given the increased funding and staffing, the increased output is not surprising. Even so, this increase might seem disproportionate. Director Shiu’s OFCCP has passed new, unprecedented and controversial regulations updating Section 503 of the Rehabilitation Act and VEVRAA, calling for increased hiring of Individuals with Disabilities and of veterans, setting “aspirational goals” that many federal contractors fear will turn into quotas. It has issued a number of new directives and rescinded some from previous years. It has not only pursued systemic discrimination claims, but also has returned to pursuing technical violations, such as no or inadequate job posting, outreach to minorities, women, veterans and the disabled, and has increased its audit activity. It has set ambitious agendas and told us that changes to analyzing pay are coming down the pike. Compared to the OFCCP in the Bush and Clinton years, this OFCCP is on steroids!

The “Numbers Game: After 1978, 11 agencies were consolidated into the OFCCP. Funding, and consequently, staffing, steadily dropped. Staffing fell between FY 1994 and FY 1997. While the OFCCP’s budget improved in 1997 ($59MM, up from $56MM for the period FY 1994 to FY 1996), staffing did not return to FY 1994 levels. In FY 1994 the OFCCP’s Full-Time Employee count was 785. The number steadily declined, however, showing a FTE count of 712 in FY 1997 and 727 in FY 1999, and then peaking at 800 in FY 2000.iv In FY 1999, the OFCCP resolved 489 fewer complaints than in FY 1994, a 61% decrease and it resolved fewer complaints in FY 1994 than in any of the preceding 13 years (in FY 1982 the OFCCP resolved 2589 complaints, whereas in FY 1994, the OFCCP resolved slightly over 800 complaints — a 69% decrease!).v While the OFCCP’s compliance review numbers increased by FY 1999 despite inadequate staffing and funding, (5,875, up from 3,476 in FY 1996)vi these numbers were still significantly below those of the previous decade. Inadequate funding and staffing clearly limited the OFCCP’s ability to carry out more investigation.

Here are some of the new regulatory initiatives that the OFCCP says it plans to introduce in 2014:

Updating Affirmative Action Requirements for Construction Contractors: Per the OFCCP, current rules, last revised in 1980, are “ineffective at making meaningful progress in the employment of women and certain minorities in the construction industry”. The OFCCP intends to issue a proposed rule in April 2014, instituting a “new method for establishing affirmative action goals” that “reflect[s] the realities of the labor market and employment practices in the construction industry today”. Allowing for a public comment period, updated rules may be approved in 2014, but still may not go into effect until 2015.

Developing a New Compensation Tool: In August 2011, the OFCCP released an Advanced Notice of Public Rulemaking, asking contractors for input on a potential compensation tool to “identify contractors likely to violate” the OFCCP’s rules and for the OFCCP’s “establishment-specific, contractor-wide and industry-wide analyses”. The OFCCP intended to issue a Proposed Rule in January 2014, but has not yet done so. While this initiative has been moving slowly over the last few years, the OFCCP is not letting it go. The actual tool, and a Final Rule, may not appear in 2014, but we can probably expect it before the end of the Obama presidency.

Updating Sex Discrimination Guidelines: Current guidelines are over 30 years old. Here, too, the OFCCP intends to ensure that rules and regulations reflect the current state of the law and the realities of the workforce. The OFCCP intends to issue a proposed rule in May 2014. Again, updated guidelines could get final approval in 2014, but may not go into effect in 2015.

This is clearly a “new” OFCCP. It talks tough, and it has enough funds and staff to walk the talk! While none of the above agenda items are new, and regardless of whether it meets its stated timetable, this OFCCP clearly has no intention of letting up. Moreover, its impact will likely spill over past Obama’s presidency. Contractors therefore need to take notice and, as the saying goes, get their ducks in a row. How does one do that? We will be talking about some best practices in upcoming posts. In the meantime, watch for Part 3 of the algorithm, which analyzes recent Shiu appointments and how they may impact the federal contractor community.

i. United States Commission on Civil Rights, Funding Civil Rights Enforcement: The President’s 2006 Request Washington, D.C. USCCR 2005 Web 11 Feb. 2014. ↩ii. Ibid ↩iii. Caution: the amount of financial settlements changes because of the way they are calculated. Like the Clinton Administration, the Obama Administration applies actual amounts that were obtained and excludes the annualized salaries that were used under the Bush Administration. ↩iv. Butler, Margaret and Rebecca Kraus, United States Commission on Civil Rights Funding Federal Civil Rights Enforcement:2000 and Beyond chapter 3, Washington, D.C. USCCR, 2001 Web 10 Feb. 2014. Note, however, that the OFCCP had not been hiring to its approved ceiling. The OFCCP was apparently allocated 739 FTE’s in FY 1997, (712 actual) 788 FTE’s in FY 1998 (743 actual), 823 FTE’s in FY 1999 (727 actual). ↩v. Ibid ↩vi. Figures relating to funding and staffing are derived from budgets for each of the Fiscal Years referenced. ↩